Which of the following would not be considered broker funds?

The correct choice indicates that a mid-term adjustment resulting in a return premium of £50 does not constitute broker funds. This is because broker funds typically refer to money that the broker holds on behalf of their clients or funds that are involved in the ongoing management of insurance policies.

A mid-term adjustment, where a return premium is issued due to a change in the terms of the policy—such as a reduction in coverage or a change in the insured risk—indicates a refund from the insurer back to the client. This type of transaction is not held by the broker; instead, it reflects a re-evaluation of the insurance contract and results in a return of funds directly to the client, which are then not part of the broker’s management of client funds.

In contrast, the other options describe various forms of broker funds. A deposit for a future claim represents money held by the broker that is earmarked for potential claims. Client premiums held for a year are funds that brokers manage on behalf of their clients until they are paid to the insurer or until policy adjustments happen. Commissions received in advance are also funds the broker might manage while awaiting payment or allocation against future services. Therefore, the mid-term adjustment resulting in a return premium clearly illustrates a transaction that